Contractual and Legal Considerations for Implementing Back-to-Back Conditions in Construction Subcontracts

Abstract

Construction projects are rarely completed without the main contractors’ use of subcontractors. As a result of the inherited contractual and legal interfaces, subcontracting normally poses several challenges for both main contractors and subcontractors. In light of this, the research focused on problems that commonly arise at the subcontract level, particularly those related to the back-to-back framework. According to the relevant literature, the major concerns for scholars and practitioners in subcontracting are (1) contract privity between contracting tiers, (2) conditional payment clauses, (3) assessment of damages, and (4) claim procedures and management. This study conducted a comparative analysis of each of the aforementioned issues between the Egyptian Civil Code (ECC) and the relevant conditions of the first edition of construction subcontract published by the Federation Internationale des ingenieurs-conseils in 2011 published by the Fédération Internationale des Ingénieurs-Conseils (FIDIC). The authors checked the compatibility of the relevant FIDIC subcontract provisions when used within the ECC jurisdiction. The analysis identified some incompatibilities and shortcomings in the ECC and FIDIC subcontract, and the authors recommended modifications and additions to their provisions. Accordingly, the proposed additions in the ECC (1) tackle the ambiguity around the conditional payments in subcontracting, and (2) introduce provisions about the extension of time claims under subcontracts. In addition, multiple changes have been proposed to the FIDIC subcontract clauses for compatibility and better operation of subcontracts within the ECC jurisdiction.